Akzo Sits Tight in Face of PPG Bid -- WSJ

By Christopher Alessi 

FRANKFURT -- Dutch paints and chemicals maker Akzo Nobel NV on Tuesday rejected a request by Elliott Management Corp. and other investors to hold an extraordinary shareholder meeting to oust the company's supervisory board chairman.

Akzo's dismissal of the request comes a day after paint giant PPG Industries Inc. submitted its third bid for the Dutch company, raising its offer to EUR24.6 billion ($26.4 billion), or EUR96.75 a share. That is up from a sweetened bid of EUR88.72 a share last month. PPG called the new proposal "one last invitation" for Akzo's board to engage in talks.

Activist investor Elliott's call for an extraordinary general meeting "does not meet the required standards under Dutch law," the company said in a statement. The company also reiterated its full backing of Chairman Antony Burgmans.

"The request is irresponsible, disproportionate, damaging and not in the best interests of the company," Akzo said.

Elliott called for the EGM two weeks ago, as it was pressuring Akzo to engage in sale talks with rival PPG. Mr. Burgmans is seen as an obstacle to a PPG takeover of the Dutch firm.

Elliott and other investors including U.S.-based Causeway Capital Management LLC -- Akzo's largest shareholder with about a 6.7% stake -- have been pressuring Akzo's management to negotiate with PPG since the Pittsburgh-based company first made an initial takeover approach of EUR83 per Akzo share at the start of March.

"We will take a very careful look at this bid," Mr. Burgmans said Tuesday of the latest offer, presiding over Akzo's annual general meeting of shareholders in Amsterdam.

Elliott on Monday warned Akzo that this could be the company's last chance to engage in "friendly discussions" with PPG, suggesting the U.S. firm could then launch a hostile takeover. "There can be no assurance that a hostile bid -- if one were to materialize -- would include the same or improved protections and undertakings for Akzo Nobel stakeholders," Elliott said in a statement.

The latest offer appeared to address some of Akzo's concerns over how a takeover could affect its stakeholders, including commitments to maintain Dutch jobs and a promise not to relocate any of the firm's European Union production facilities to the U.S. PPG also said it would agree to a "significant reverse" breakup fee, as well as a pledge that a future combined company would be listed on both the New York and Amsterdam stock exchanges.

"Akzo Nobel has no more room for excuses now and must enter into proper discussions with PPG," said a spokesman for Akzo shareholder Columbia Threadneedle Investments.

Analysts at Evercore Partners said that if Akzo were to reject PPG's latest offer, the U.S. company could come back with a hostile approach by the start of June.

PPG said the most recent bid values Akzo at a premium of 24% over its closing price of EUR78.20 a share on April 21, the last full day of trading before the revised offer.

That was just days after Akzo unveiled the details of a new strategy to separate its specialty chemicals unit, which is part of Chief Executive Ton Büchner's continuing effort to ward off PPG. Mr. Büchner has repeatedly refused to engage with PPG, calling the first two takeover offers inadequate.

The company told investors on April 19 that it plans to pursue a dual-track process to have the option to either spin off the specialty chemicals business as a separate listed entity or sell it outright, to be completed within the next 12 months.

The Dutch company first announced last month that it planned to separate its chemicals business, when it disclosed PPG's interest, and has said the plan would create more value for shareholders than PPG's offer.

Write to Christopher Alessi at [e-mail]

(END) Dow Jones Newswires

April 26, 2017 02:48 ET (06:48 GMT)

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